Thursday, September 30, 2010
When you borrow money for a house, where does the money come from?
If you haven't already learned that bankers create the money they lend you out of thin air (tied to their reserves) you can take my word for it and move on or come back later when you've caught up.
Let's say you're interested in a fairly nice house in Stockton, California for $100K. According to some random lending website you can finance just such an investment for a mere $1150 a month over thirty years. That seems pretty high to me.
Creating money out of thin air against your good credit is one thing. How else do you create money except out of thin air? It doesn't grow on trees. You can't dig it out of the ground. You can scrounge stuff together and trade it in for money but in the end it's just stuff. Stuff isn't money, it's stuff.
Money measures the value of stuff. At least that's the theory. Stuff has value in a free market.
When the bank creates $100K and you give it to the seller of the house, you don't owe the seller anymore but you owe the bank something like $1150 a month for thirty years. You have a mortgage.
“Mort gage” is pseudo French for “death wager.”
As soon as the ink in your signature dries, the bank creates one hundred thousand dollars that never existed before you had the nerve to ask for it. It was created entirely (almost) out of your good credit.
The bank lends you money it doesn't have based on your ability to repay it. Then they charge interest.
Let that sink in. Banks charge interest on money they never earned. Plus, they keep the money.
What has backed the value of our money since Richard M. Nixon took us off the Gold Standard in 1971? Since 97% of money is now created by banks in the form of loans, our money is supposedly backed by the value of the collateral backing those loans.
The trouble is, the banks just keep all of the money they receive as loan payments. They keep it and spend it. All that money you give to repay your loans is never destroyed. Great Grandpa's house that fell down still has all of the money created to build it in circulation. Nothing backs that money.
Money created must be destroyed.
If you've followed along so far, I'm sure you understand why the world is bankrupt. Such massive cheating can only end badly. Only the richness of the natural world has disguised this madness so far. As long as material wealth could be extracted somewhere and somehow, it made up for most of the cheaters skimming all the wealth. You've seen how extravagantly the elite live. A few feast while the rest starve.
Shall we let people loan our own credit to us at interest knowing that their usury is the reason the world is bankrupt? The notion is preposterous to me. I can't imagine a legitimate government allowing such theft. American money was supposed to be controlled by Congress and Congress supposed to be controlled by the people themselves. Constitutional arguments might not be enough against psychos.
Or we can let it lie. Lay there and take it. That's just the way it is. You can't beat City Hall.
Face up to it. You're being cheated. The banks are stealing your money. They are feeding you table scraps when you should be feasting from your efforts.
The funny thing here of course, is that if the world outlawed interest everyone's standard of living would go up – including bankers – by a factor of ten. Without usury, a man is left to invest in Enterprise.
Saturday, September 18, 2010
125 banks have gone belly up so far this year.
I think it's astounding that any bank could possibly ever go broke. In a usury-free world, this would never happen.
Imagine that through some freak accident of DNA mutation caused by genetically modified food, I suddenly transformed into a banker.
Banks are authorized by our government to create new money in digital form. They can't actually print money, but bills and coins make up only 3% of "money" today. The rest of our money exists only as numbers inside banking system computers.
When someone takes a home loan at my bank, I get title to his house until he pays off the loan. If he stops paying me, I take his house, sell it and keep all the money up to whatever he owes.
Even if I don't charge interest, the payment of principle alone is all profit for me. I didn't really work for the money I loaned out, the government just let me create it! Easy money.
Every aspect of the loan has been verified, insured and even federally garuanteed. I get risk-free profit from this deal for years to come. What a great job!
The trouble comes from charging interest.
If a house is worth $100,000 and a bank creates $100,000 out of thin air against it, everything is in balance. There is enough money put into the world to make all of the payments on the loan. Debits and credits are in balance.
When a bank charges interest, they demand more money than they create, causing an imbalance in the money supply. More money is owed than exists. Eventually, someone comes up short and can't pay. The more money is lent at interest, the harder it is for customers to make payments.
My own greed to charge interest on money that was never really mine to start with (multiplied of course by all the other bankers doing the same thing) is what will eventually kill my bank. Suddenly, the money doesn't look so easy.
When a bank charges interest on a loan, they are charging more for something than it is worth. They can do this by colluding to set minimum interest rates -- making it impossible for a free market system to ever work. They doom themselves to fail.
The US government doesn't help the situation by making stupid rules such as the "Applicable Federal Rates."
There is a bitter irony to the banker's situation, isn't there? It would be funny except for the "too big to fail" idea that pushes unpaid debt onto taxpayer accounts.
Until banks figure out they are drinking their own poison, expect an endless stream of bank closures.
(I do NOT endorse the usury promoted by Dr. Rose.)
Please ignore the conclusion in the above video that fractional lending is the cause of inflation.
In reality, there is no reason for any reserve at all. The only limit to the creation of debt is the existence of credit.
As for David Icke's video at the top, he's pretty much spot on. Only small banks are failing, and they are being gobbled up by the elite banking families at the top of the money pyramid.